What to Do if You Don't Have a Workplace Pension

December 27, 2023 (Investorideas.com Newswire) If you don't have a workplace pension, you're at a disadvantage when it comes to retirement savings. But that doesn't mean you have to give up on your retirement plans altogether.

Although employee pension plans certainly help, they aren't the only way you can prepare for retirement. By beefing up your finances early, you can save what you need.

Don't Put Emergency Savings on Hold

With your eyes on retirement, you might be tempted to hit pause on any other savings. Rerouting your emergency fund savings will certainly increase your retirement fund, but the benefits don't outweigh the risks.

If you don't save for an emergency, you may not have enough savings to cover an unexpected appliance replacement or auto repair without taking out a line of credit.

What is a line of credit good for if not emergency expenses? While it's true, having a line of credit can be helpful in emergencies, it's meant to round out your finances when your savings fall short. They supplement your savings, not replace them outright.

Withdrawing from your retirement fund is not a good alternative either. Taking money out before you're 65 can result in fines and tax penalties unless you use those funds to buy a home.

Find a Registered Retirement Plan

Squirrelling away your savings in a basic savings account is better than nothing. But it's not an effective way to prepare for retirement. You need a tax-advantaged registered retirement plan (like an RRSP or 401(k)) that earns a higher interest rate. You should aim for 7% on the account of your choice.

Talk to a Financial Planner

Choosing the best plan for you can be hard on your own. Talking with your bank's financial planner can bring some clarity to the issue.

A financial planner can help you decide whether you're a conservative saver or more risk tolerant. They can help you find funds that invest in industries that matter to you, like environmental causes. They can also help you map your anticipated returns, so you know how much you should set aside each month to provide the safety you need in retirement.

Most banks offer financial planning services for free, so don't pay for this advice. You can also play around with free apps and calculators to test out investing.

Reduce Expenses

Once you know your savings targets, it's time to prioritize monthly savings. Sit down with your budget to see how many unnecessary expenses you can cut to free up more cash.

At the same time, you might want to focus on paying down debt. Entering retirement without debts makes your job easier; you'll also have more of your monthly budget available to save once you don't have to pay personal loans.

Automate Savings

Consistency is just as important as size when it comes to saving. Automating your savings means you won't forget to move money.

Ideally, you don't make a single lump-sum payment each month. Increasing the frequency of your contributions helps your investments grow. You can set up bi-monthly or weekly contributions to make interest work for you.

Job Search

Between your private fund and national pensions, you can be prepared to retire without a workplace pension. But let's be honest — these employee plans make retiring on time, with confidence, easier — especially if your employer matches your contributions.

Start looking at other jobs to see if you can score a better benefits package. But even if you switch jobs, don't give up on the tips here today. Anyone can follow them to save better.

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